If I buy a property in a trust structure, build 3 units and sell 2, can I then sell the third one to myself to become my personal PPOR?
Also, MUST I sell this third unit to myself at market value or can I sell it for less – idea to sell at cost twhich means project breaks even with no CGT implications?
Thanks
Propertylearning
I beleive you can sell it to yourself for whatever amount you fancy, but for taxation and stamp duty purposes you will be required to calculate the amount at market rates.
Maybe you will need a few valuations to prove the value if audited.
Terryw
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Thanks for response. So I am presuming then that you will still be liable for CGT?
Propertylearning
Hello
May I ask why you would want to sell the 3rd unit to yourself?.
As a beneficiary of a trust is it not possible to live in it as your PPOR? Does it effect things like land tax and CGT in the future?
Thanks [smiling]
ElkaI have done this on many ocassions and retained a property in my own name or Family Trust name that my Pty Ltd Company has developed.
The only requirement is that the property is purchased at cost price + $1. As is mentioned you don’t avoid the stamp duty and will merely defer the tax liability if it is an IP.
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Elka,
The thought was to sell third unit to ourselves at lowest possible price to reduce CG on initial development. Property would become PPOR and when sold down the track would not have CGT which it would if remaining in the trust and we rent from trust. We expect high capital growth in property.
If we can get it low enough, we would own outright (hence no non-deductibe debt) and would then borrow against it for further personal investments (ie shares) which would make all interest tax deductible. I know we can do all of that in the trust, but were just wondering about alternatives.
Terry and Richard you’re info seems to conflict, or is it that I can sell for whatever price, but tax office will deem a certain value or can we argue that value is cost price + $1, which would be cost of development of that unit I presume?
cheers
propertylearning
Hi Elka
I am not sure what Richard meant, but I was thinking of s112-20 of the Income Tax Assessment Act (1997), which covers the Market substitution rule, see:
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s112.20.htmlTerryw
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Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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